Orange juice prices will remain high in the first half of the year, while pineapple juice will bottom out due to oversupply, according to the latest projections from Informa Agribusiness Intelligence.
The price of frozen concentrated orange juice will remain high for at least six month, weakening consumer demand, in part because of crop disease in Florida and Brazil – two of the world’s biggest producers. Its price has risen from $2,200 a tonne to $3,000 tonne in Europe, but it’s likely that there will be a marked increase in prices across the board as the new season’s orange juice comes into the supply chain in the next three months.
That means further bad news for the orange juice category; global consumer demand has been waning for some time and in the US market, retail sales have been declining by between 6% and 8% a year for the last five years.
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Consumer concerns over the sugar content of fresh juice and the decline of the breakfast market will further serve to impact on demand, according to Informa Agribusiness Intelligence. That’s in spite of positive attitudes towards 100% fruit juice among European millennials. The combination of these factors means smaller pack sizes and mixed drinks with additional minerals will become a lot more common, as retailers look to appeal to consumers that are simultaneously health-conscious and price-sensitive. The Brazilian harvest, which is expected to be larger this season, should weaken prices. But if Brazilian suppliers instead look to replenish their inventory, prices could remain high for the next few years.
Informa Agribusiness Intelligence has also predicted that the relatively low price of apple juice will remain at its current level for the foreseeable future, with Poland – one of the biggest suppliers of apples to the global market – continuing to compete with China.
The competition means that the supply of apple juice concentrate is more than enough to meet demand, while cold-store technology means producers in both China and Poland are able to stockpile apples for use in fruit juice or for fresh consumption for up to a year.
While the high price of orange juice normally leads to consumers drinking more apple juice instead, which could increase demand, the abundance of supply means that apple juice prices will remain at a constant.
Woes for pineapple juice
The bleakest outlook is for pineapple juice, which is expected to crash amid oversupply – although the picture is ‘much more complicated’, Informa said. Poor conditions resulted in the smallest pineapples Thailand has seen for years, while excessive nitrate levels resulted in many of the pineapples produced being unacceptable to markets like the European Union (EU).
As a result, prices increased sharply, which led to pineapple juice being delisted by many retailers in the EU and the market stalled. Changes to EU juice regulations meant that nitrate level maximums for pineapple juice were raised from 25 parts per billion to 50 parts per billion. This led to blenders in Thailand mixing different juices with varying levels of nitrate to meet the maximum level, which then flooded the market. As a result, the demand for pineapple juice in the EU has practically disappeared, while producers in Thailand are sitting on reserves of pineapple juice, Informa said. The research company expects nominal demand in Europe in the coming year.
Informa Agribusiness analyst Neil Murray explained: “Orange juice continues to be a woeful market where demand is declining as prices are increasing, but it will be interesting to see the impact of the Brazilian harvest in the new season. Apple juice offers a welcome spell of constancy in the fruit juice market, as prices remain low through steady supply from China and Poland. However, chaos in pineapple juice has essentially killed the market in Europe for the next year at least. Suppliers and blenders need to be wary in the face of complete reversal of prices in orange and pineapple juice, growing health concerns over sugar and changing consumer tastes which could spell trouble for the industry.”
Informa’s research comes three months after British retailers suffered a shortage of courgettes and leafy vegetables, with crops blighted by a combination of floods, snow and storms in southern Europe.
The vegetable shortage cost retailers almost £8 million in January alone, according to figures from IRI.
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